China central bank issues guidelines for banks to issue large certificates of deposit

[SHANGHAI] China's central bank on Tuesday issued rules governing the transfer of large-scale certificates of deposit (CDs), saying they will pave the way for full interest rate liberalisation.

The announcement, on the central bank's website, said that the CDs will be covered by China's deposit insurance programme.

It said the CDs can be issued to individuals, non-financial firms or institutional investors, subject to different minimum thresholds. Individuals need a minimum of 300,000 yuan (S$65,980), while institutions will need 10 million yuan to participate.

The People's Bank of China (PBOC) said floating rates for the CDs will be based on the Shanghai Interbank Offered Rate (SHIBOR).

It has been driving the use of CDs as a way to free the flow of capital within its financial system and market-determined interest rates.

REUTERS